Joyce Bud­get likely to keep a tight rein

With the good times back, the job is much harder for Fi­nance Min­is­ter

Weekend Herald - - AUDREY YOUNG -

When John Key sud­denly re­signed as Prime Min­is­ter, an im­per­cep­ti­ble power shift meant deputy leader Bill English was the only se­ri­ous con­tender to re­place him. That wasn’t al­ways the case. Steven Joyce was con­sid­ered an ob­vi­ous heir, if Key had fallen un­der a bus ( along with Si­mon Power who re­tired early from politics). English was not in the pic­ture.

But some­thing changed over Na­tional’s first and sec­ond terms and Joyce was slowly over­taken by English in a power shift that be­came ob­vi­ous only when the crunch came.

By that time, it would have been a shock had Key im­plored the cau­cus to se­lect Joyce as his re­place­ment in­stead of English last De­cem­ber.

Joyce has to be sat­is­fied with be­ing Fi­nance Min­is­ter, and this week he de­liv­ers his first and pos­si­bly only Bud­get if Na­tional can­not form the next gov­ern­ment.

Sat­is­fied is an im­por­tant word be­cause he is. There has never been any sense of ri­valry with English or sense that Joyce felt hard done by or de­prived a chance at the top job.

He cer­tainly has never cul­ti­vated the back­bench as many of those with lead­er­ship as­pi­ra­tions do.

But his var­i­ous jobs as the Gov­ern­ment’s key po­lit­i­cal strate­gist, Na­tional’s elec­tion cam­paign chair­man for five con­sec­u­tive elec­tions, as well as Fi­nance Min­is­ter, clearly make him the sec­ond most pow­er­ful man in the coun­try.

Thurs­day’s Bud­get won’t be the one that de­fines Joyce or even shows what sort of min­is­ter he would be if he is back in the job next term.

There just hasn’t been time to stamp his mark on the port­fo­lio yet. And they are still English’s sur­pluses to spend.

A log­i­cal de­mar­ca­tion has al­ready oc­curred with English and his pro­tege, Amy Adams, con­tin­u­ing the work on so­cial spend­ing, while Joyce and his pro­tege, Si­mon Bridges, are con­tin­u­ing the work on roads, trains, bridges, busi­ness, and re­duc­ing tax­a­tion.

That evo­lu­tion was ev­i­dent in the re­spec­tive pre- Bud­get speeches by English on so­cial in­vest­ment and Joyce on in­fra­struc­ture.

Other dif­fer­ences in style may emerge be­hind the scenes. Joyce is a de­tails per­son and may likely be more de­mand­ing on Trea­sury to im­prove its fore­cast­ing and pol­icy anal­y­sis than English.

English saw Trea­sury ex­pand its think­ing beyond bal­ance sheets into im­prov­ing peo­ple’s lives and en­gag­ing with a greater range of stake­hold­ers.

Led by Gabriel Makhlouf, Trea­sury is not likely to drop that new di­men­sion — and nor would Joyce ex­pect it to. But it may not re­main as im­por­tant now that English is no longer Min­is­ter of Fi­nance.

The rea­son Joyce was over­taken by English over two terms was not so much that Joyce’s stocks fell, although they did a lit­tle ( Sky City, MBIE ex­cesses, North­land by­elec­tion, Eminem); it was be­cause English’s stocks rose through his per­for­mance as Fi­nance Min­is­ter.

The bad times served English well. Good times are harder for fi­nance min­is­ters.

In an era in which ex­pec­ta­tions of suc­cess were low, he as­serted him­self as ste­ward of the pub­lic ser­vice and pro­duced a plan and re­sults that stood out.

The lan­guage of Bud­get changed: cuts be­came sav­ings and spend­ing be­came in­vest­ments. His catch cry was “Re­straint is per­ma­nent”.

Now the good times are back, the job is much harder for Joyce. He has more choices than English had.

But things have not re­turned to nor­mal. The year Na­tional took of­fice in the midst of the global fi­nan­cial cri­sis was the year politics- as- usual stopped. Politi­cians stopped mak­ing big prom­ises.

The elec­torate was look­ing for re­straint and that ex­pec­ta­tion has not dis­ap­peared.

Joyce’s chal­lenge will be to pro­duce an elec­tion- year Bud­get with­out it look­ing too much like an elec­tion- year Bud­get.

It is im­por­tant to re­mem­ber that this is the first fi­nan­cial year since 2008 that started with a known sur­plus.

The 2015- 16 year even­tu­ally posted a $ 414 mil­lion sur­plus, but at the start of that year it was forecast to be a deficit of $ 684m.

It is easy for Op­po­si­tion par­ties to ad­just to a sur­plus men­tal­ity with an abun­dance of ideas of how to spend it but sur­pluses do not yet feel nor­mal.

Some of the re­straint is be­ing la­belled a “cut” by the Op­po­si­tion, such as growth in health spend­ing be­ing $ 1.7 bil­lion less than Labour would have.

But with in­equal­ity and poverty still reg­is­ter­ing high in vot­ers’ is­sues of im­por­tance, the fo­cus of the an­nounced spend­ing in the Bud­get so far has been on re­dis­tribu­tive and so­cial mea­sures.

The first pay­ments in the $ 2.048b pay eq­uity set­tle­ment will be in this Bud­get, as will some of the $ 2.23b Crown Build­ing Project and $ 321m new fund­ing for so­cial in­vest­ment pro­grammes.

Joyce has firmly sig­nalled a fam­i­lies and tax pack­age, as did English long be­fore him.

In fact, it was in De­cem­ber 2014’ s Bud­get pri­or­i­ties for the fol­low­ing year, that the 2017 move for tax re­lief was fore­shad­owed with the fol­low­ing pri­or­ity: “Be­gin­ning to re­duce in­come taxes from 2017 with a fo­cus on low and mid­dle- in­come earn­ers.”

Re­vers­ing some of the 2011 changes to Work­ing for Fam­i­lies is a clear op­tion.

De­signed and im­ple­mented in phases to min­imise out­right cuts in nom­i­nal sums, low­er­ing the thresh­old at which abate­ment kicks in and rais­ing the abate­ment rate was de­signed to save $ 448m over four years.

Per­haps the best mea­sure of what sort of Fi­nance Min­is­ter Joyce will be, if Na­tional sur­vives in Gov­ern­ment and he gets to keep fi­nance in a coali­tion deal, is the new debt tar­get he set in his pre- Bud­get speech last month.

The head­lines fo­cused on the huge in­fra­struc­ture spend but he set a new debt- re­duc­tion tar­get — be­tween 10 and 15 per cent of GDP by 2025, to re­place 20 per cent by 2020.

Net debt is cur­rently $ 64b com­pared with about $ 10b just as the GFC started ( 24.3 per cent of GDP com­pared with 5.4 per cent).

That sug­gests some­one who is happy to limit fu­ture spend­ing, some­one who is happy for re­straint to be per­ma­nent.

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